GBP/USD Daily Price Forecast – GBP/USD Moves Up On Brexit Optimism Ahead of UK GDP UpdateSterling bidders remain in control heading into the London market session, fueled by Brexit hope.
The GBP/USD is grinding its way higher for Wednesday, clearing 1.3150 in early trading as bullish-hopefuls continue to cling to headlines that suggest that Brexit may not turn into the flaming mess many investors are fearing. This week is seeing a revival in the bulls’ camp as the UK and the European Union look set to try and strong-arm their way into an interim deal ahead of a fast-approaching November deadline, and risk-hungry investors are jumping on the GBP train in anticipation of some forward momentum on talks. The Pound got a nice boost mid-US session from headlines suggesting the EU and the UK have moved further in their way to clinching a Brexit deal. According to diplomats familiar with the matter, both economies have narrowed the gap on the Ireland border issue, but some differences remain. As of writing this article, the GBPUSD pair is trading at 1.3171 up 0.62% on the day.
UK’s GDP Update Could turn out to Be Sterling Bull’s Bane for the Day
On Brexit proceedings, it is also expected that an agreement on the future trade relationship could be done by November, while the divorce terms could be out next Monday. But as of now there is no clear update on how long the UK will remain embroiled in the European customs union following Brexit. Meanwhile the Eurosceptic Brexiteers within UK Prime Minister Theresa May’s own party still remain a viable threat as they continue to remain focused on their stance to vote down any Chequers-based deal that PM May might squeeze out of the EU. On release front, UK will release Industrial and Manufacturing Production data for August and the GDP estimate and trade balance for the same month. UK’s GDP data is forecast to clock in at 0.1% a slight contraction from the previous month’s 0.3%, and a missed reading here could see bulls having a harder fight than they anticipated as Britain’s economy still struggles to throw off signs of stagnating growth within their domestic economy.
On other side of Atlantic, US markets will see release of PPI data which is expected to come at 0.2% while previous reading was at -0.1% which could give US Greenback a bullish boost during north American market hours. Despite obvious sell-side risks present for the Cable heading into the latter half of the week, the GBP/USD pairing remains well-bid during the early half of Wednesday. Meanwhile on technical front, the 4 hours chart for the pair shows that it found support around a flat 200 EMA and is developing above a bullish 20 SMA, while technical indicators bounced from their mid-lines, holding below previous monthly highs despite the price reaching a fresh one as the pair has managed to breach steep resistance level at 1.3170. But clear directional move is unlikely this weak owing to incomplete Brexit deal and more Brexit updates to follow in days to come. Expected support and resistance for the pair are at 1.3130, 1.3100, 1.3070 and 1.3175, 1.3195, 1.3215 respectively.